Séamus Kirk (Louth, Fianna Fail)
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Question 199: To ask the Tánaiste and Minister for Finance his views on extending the tax relief provision to community trusts with taxable income, who donate funds to approved charitable status organisations and certain sporting bodies as provided under Section 41 of the Finance Act 2002; and if he will make a statement on the matter. [1073/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Section 41 of the Finance Act 2002 inserted Section 847A into the Taxes Consolidation Act 1997. Section 848A of the same Act is also relevant to the Deputy's question.

These two sections provide for a scheme of tax relief in respect of donations to certain sports bodies (Section 847A), and in respect of donations to certain charities and other approved bodies (Section 848A).

Section 847A gives tax relief for donations to approved sports bodies for the funding of approved capital projects costing up to €40 million. The minimum qualifying donation in any year to an approved sports body is €250. Eligibility for the relief centres on two key criteria — the sports body must be an 'approved sports body' and the donation must be for the purposes of an 'approved project'.

An 'approved sports body' is one that has a valid tax clearance certificate from the Revenue Commissioners and a statement, also from Revenue (in accordance with Section 235 of the Taxes Consolidation Act 1997), that the body is exempt from tax because it is established solely for the purpose of promoting athletic or amateur games or sports and its income is applied solely to that purpose.

An 'approved project' is a capital project, costing up to €40 million, approved by the Minister for Arts, Sport and Tourism.

Similar to Section 847A, Section 848A provides for tax relief for certain charities and other approved bodies, including first and second level schools and third level institutions, in respect of donations received. In order to qualify for the relief, the minimum donation to any one eligible charity or approved body in a year is €250. A charity must have charitable status approved by the Revenue Commissioners for at least two years in order to qualify under the scheme.

The two year rule allows charities to establish a track record of charitable activities as set out in their founding documents, and it enables the Revenue Commissioners to examine an audited set of accounts from any charity wishing to avail of the donations scheme. This is an important element of the scheme and is designed to ensure that the public can be confident that their donations and the tax relief provided by the Exchequer will be used for bona fide charitable purposes only.

The arrangements for allowing tax relief for donations are the same for Section 847A (sports bodies) and Section 848A (charities and other approved bodies). They depend on whether the donor is a PAYE taxpayer, a self-assessed taxpayer, or a company. In the case of donation by a PAYE taxpayer, the tax relief is given to the sports body, charity, or other approved body; in the case of a self-assessed taxpayer, the relief is claimed by the self-assessed individual himself or herself; in the case of a company, the company is entitled to claim a deduction for the donation as if it were a trading expense for the relevant accounting period.

Both of the above tax relief schemes are fully available to all community groups where they can satisfy the associated conditions.

Any trust, body or organisation wishing to have charitable status for purposes of Section 847A and Section 848A should contact Revenue about the arrangements/conditions for achieving charitable status and hence the possibility of benefiting from any consequent tax reliefs.

The scheme of tax relief on donations to certain sports bodies and to certain charities and other approved bodies has proved itself to be beneficial to these bodies in their very valuable and highly commendable work in, and on behalf of, their communities. I recommend the scheme to all charities, clubs and trusts that can meet its requirements and conditions.